EU clears hurdle for U.S. trade talks but kickoff still far away

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— Pending U.S. trade negotiations with the European Union cleared a hurdle in Brussels after EU member nations approved a negotiating mandate, but talks are still far from starting given continued differences with the U.S. over the scope of a possible agreement.

— President Donald Trump nominated Nazak Nikakhtar to lead Commerce’s Bureau of Industry and Security, an agency that has been at the front lines of his national security tariffs and stepped-up efforts against China.

— Rep. Henry Cuellar (D-Texas) is organizing a congressional delegation to Mexico to discuss the necessary Mexican labor reforms required under USMCA with Mexican officials, among other things.

IT'S FRIDAY, APRIL 12! Welcome to Morning Trade, where your host has to get his vegetable garden into shape this weekend. Got any suggestions for what I should plant? Or trade tips?

Driving the Day

EU CLEARS HURDLE FOR U.S. TRADE TALKS BUT KICKOFF STILL FAR AWAY: European nations have agreed in principle to negotiating directives for a trade deal between the European Union and U.S., but it’s still unclear if the talks will get off the ground as the two sides remain deadlocked over the scope of any agreement. The U.S. wants to use the deal to crack open the EU’s agriculture market, which is something Brussels said has never been on the table.

Thursday’s action at least clears a procedural hurdle in the EU, where internal debate had kept the 28-nation bloc from agreeing on how to direct the European Commission, which negotiates on behalf of member states, to proceed with the talks. France had raised objections until the last moment, fearing the talks could revive a politically toxic trade debate ahead of next month’s European Parliament election.

"We may be ready to launch negotiations, but it's difficult to see how we can find a common ground," said Bernd Lange, chairman of the European Parliament’s trade committee. POLITICO Europe’s Hans von der Burchard has more here.

A ‘brutal’ trading partner: U.S. Ambassador to the EU Gordon Sondland warned on Thursday that the U.S. will aggressively combat what it views as unfair trade barriers leveled against U.S. companies. "I think if we woke up five years from now, the level of non-tariff barriers and the deficit will be so insurmountable," Sondland said at a POLITICO Europe event in Brussels. "It would be so difficult for U.S. companies to compete in Europe."

His comments come just hours after President Donald Trump tweeted that the EU is "a brutal trading partner with the United States, which will change.”

TRUMP TAPS NIKAKHTAR FOR COMMERCE UNDERSECRETARY SLOT: Trump has nominated Nikakhtar, who is currently assistant secretary of Commerce for industry and analysis, to be undersecretary of Commerce for industry and security. As the head of the Bureau of Industry and Security, Nikakhtar will be on the front lines of the administration’s fight against China and play a key role in developing new regulations to tighten exports of critical and emerging U.S. technology.

She would replace Mira Ricardel, who went to the White House last year to work as a deputy national security adviser and lost that job after clashing with first lady Melania Trump. Nikakhtar previously worked as a trade attorney at Cassidy Levy Kent. Prior to that she worked in the enforcement and compliance unit of the International Trade Administration’s China/non-market economy office. She also served a stint at BIS as an industry analyst.

China hard-liner: One private-sector source said Nikakhtar has been described as almost “Navarro-like” in her views toward China — a reference to extreme China hard-liner and White House trade adviser Peter Navarro. Nikakhtar has even suggested dismantling Commerce’s trade promotion programs in China over fears that it was only feeding the theft of U.S. technology, the source said.

A separate private-sector source said Nikakhtar warned U.S. aerospace executives at last summer’s Farnborough Air Show, a major annual industry event in the United Kingdom, to begin disentangling supply chains from the world’s fastest-growing aviation market.

MEXICAN ENVOY: BORDER DELAYS HURT AUTO INDUSTRY: The North American auto industry relies on companies being able to quickly transport parts across the border, Mexican Ambassador to the U.S. Martha Bárcena said Thursday. Frustration has been building in recent days over long delays at the U.S.-Mexico border due to the Trump administration’s decision to reassign 750 U.S. customs personnel who inspect commercial goods to help Border Patrol on immigration duties.

“The automotive sector in North America is highly efficient and integrated. One piece of a car can cross the borders up to 7 times … before the car is finally assembled. We need secure, fast, and working borders to increase competitiveness,” Bárcena said in a tweet.

Bárcena added in a Spanish tweet that “any delay in the delivery of parts affects the entire supply chain.”

Mexican Foreign Minister Marcelo Ebrard said Wednesday that Mexican officials would speak with Department of Homeland Security leaders to work through the issue. Ebrard said the slowdown at the border is a “very bad idea,” adding it’s costly for both U.S. and Mexican industries.

WTO MEMBERS WANT RESOLUTION TO U.K.-EU QUOTA ISSUE: The U.S. and other World Trade Organization members want the United Kingdom and European Union to use a Brexit extension to figure out lingering issues related to how the U.K. would access tariff-rate quotas on sensitive EU imports such as beef and dairy products.

The U.S., Brazil, India, China, Mexico, Russia and other countries on Thursday once again raised concerns at the WTO Goods Council about the way the U.K. and EU plan to split their combined import ceilings. Countries argue that the proposed split would effectively decrease volumes of their exports.

The U.S. said it "will not accept an EU-U.K. approach to TRQs that is prejudicial to our existing rights. … The current approach to Brexit TRQ negotiations is unacceptable and we are eager to engage [with the EU] to ensure our rights are maintained," according to a Geneva-based trade official.

AZEVÊDO: SOLVING APPELLATE BODY ISSUE IS ‘ABSOLUTELY CRITICAL’: Current international trade tensions are at least part of the reason why the WTO’s dispute settlement body is busier than at any point in the past two decades — meaning the stakes for resolving the current impasse over its appellate body are that much higher, the head of the global trading body said Thursday.

During a visit to Washington, WTO Director-General Roberto Azevêdo called the dispute settlement system a “fundamental pillar” of the organization that helps “depoliticize issues by focusing on the technical elements,” which in turn “helps to dissipate tensions.”

The U.S. has for years been blocking the appointment of new judges to the Appellate Body over concerns that the panel has overreached its mandate and infringed on national sovereignty. If the U.S. doesn’t back down, the panel will not have enough members to hear cases by the end of the year.

“Finding an urgent resolution in this area is absolutely critical for the system,” he said during a speech at the Peterson Institute for International Economics.

CUELLAR TO TAKE DELEGATION ON USMCA TRIP TO MEXICO: Cuellar is organizing a trip to Mexico for House Democrats to learn more about the new trade pact and Mexico’s labor commitments in the deal. The Texan, who plans to support USMCA, told Morning Trade he’s pushing to make the trip happen during the two-week recess that just began.

The trip is an opportunity for lawmakers to discuss the necessary Mexican labor reforms required under USMCA with Mexican officials, he added.

Cuellar said he’s trying “to get at least one other member that’s more neutral,” given his very pro-trade attitude. He added he has discussed it with House leadership and they’re “receptive to the trip.”

PORK INDUSTRY SEEKS QUICK START TO U.S.-JAPAN TALKS: The pork industry is eager for U.S. trade talks with Japan to kick off — it plans to lobby the administration to move quickly to strike a favorable agreement, citing U.S. pork producers’ shrinking market share in Japan as a reason for urgency.

"The U.S. pork industry cannot get a free trade agreement with Japan implemented fast enough," Nick Giordano, vice president and counsel for the National Pork Producers Council, said at a media roundtable Thursday. He explained that the CPTPP has edged out U.S. producers that are already suffering from retaliatory tariffs.

"The fact that we're on three retaliation lists — and I'm not sure there's an industry in the country that's on three retaliation lists — is an immediate hair on fire issue," he said. "But what a lot of people don't know is what we have at stake in Japan, which is our biggest value market and the math says you've got a big problem."

INTERNATIONAL OVERNIGHT

— House Democrats express concerns about whether USMCA’s labor provisions will lead to meaningful changes in Mexico, POLITICO Pro reports.

— Senate Democrats warn of a rural disaster as the result of Trump’s trade wars, POLITICO Pro reports.

— Trump’s trade wars are shrinking profits of farmers around the country but they still think he can prevail in the end, Bloomberg reports.

— The U.S., Canada and EU are offering a robust alternative to China’s belt and road initiative, the South China Morning Post reports.

— The IMF’s chief economist says an auto tariff war would hurt more than the U.S.-China trade fight, Reuters reports.

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About The Author : Adam Behsudi

Adam Behsudi is a trade reporter for POLITICO Pro.

Prior to joining POLITICO, he covered international trade policy for Inside U.S. Trade, where he tracked down the latest news on the Trans-Pacific Partnership from exotic locales such as Auckland, New Zealand; Kota Kinabalu, Malaysia; and Leesburg, Va.

Before writing about anti-dumping, export controls and other trade subjects, Behsudi covered city hall for the Frederick News-Post. He got his start in journalism chasing crooked sheriffs and other crime-related news in the mountains of western North Carolina for the Asheville Citizen-Times

Behsudi earned his bachelor’s degree in 2005 from the University of Missouri. With the hope that journalism could return as a growth industry within his lifetime, he earned a master’s degree in interactive journalism from American University in 2010.